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entitled 'Human Capital: Opportunities Exist to Strengthen Controls
over Recruitment, Relocation, and Retention Incentives' which was
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Office of the Inspector General:
U.S. Government Accountability Office:
Human Capital:
Opportunities Exist to Strengthen Controls over Recruitment,
Relocation, and Retention Incentives
OIG-12-5:
Report Highlights:
Objectives:
This report examines the extent to which GAO’s Human Capital
Office had (1) established effective internal controls and oversight
mechanisms to ensure that its recruitment, relocation, and retention
incentives were consistent with GAO policy, and (2) aligned its use
of these incentives with the agency’s human capital strategic plan.
What We Found:
GAO policy authorizes the use of recruitment, relocation, and
retention incentives either to encourage individuals to accept a
position that would otherwise be hard to fill or to retain an essential
employee with unusually high or unique qualifications who is likely
to leave the agency without a monetary incentive to stay. For
calendar years 2009 through 2011, GAO used this authority for
recruitment and retention purposes and made incentive payments
of more than $1.8 million. Our audit of the internal controls and
oversight for the incentive payment award process identified
opportunities to strengthen controls, including the need to maintain
appropriate supporting documentation; provide additional guidance
to human capital staff to ensure proper, timely, and accurate
execution and recording of administrative actions; and provide
effective monitoring and oversight. In addition, we identified an
opportunity for GAO to help ensure that incentive payments support
agency recruitment and retention goals by establishing a clear
agency-wide strategy and results-oriented performance measures
for these payments.
What We Recommend:
The Office of the Inspector General (OIG) made seven
recommendations to help ensure consistency and adherence to
GAO policy related to recruitment, relocation, and retention; to
better align the use of these incentives with strategic human capital
and workforce planning goals and objectives; and one
recommendation to help management monitor and evaluate the
effectiveness of controls. GAO agreed with our recommendations.
[End of section]
Office of the Inspector General:
U.S. Government Accountability Office:
Memorandum:
Date: August 28, 2012:
To: Comptroller General Gene L. Dodaro:
From: [Signed by] Inspector General Frances Garcia:
Subject: Human Capital: Opportunities Exist to Strengthen Controls
over Recruitment, Relocation, and Retention Incentives:
In accordance with the law,[Footnote 1] GAO policy authorizes the use
of recruitment, relocation, and retention incentive payments either to
encourage individuals to accept a position that would otherwise be
hard to fill or to retain an essential employee with unusually high or
unique qualifications who is likely to leave the agency without a
monetary incentive to stay. For calendar years 2009 through 2011, GAO
used this authority for recruitment and retention purposes and made
incentive payments of more than $1.8 million. Our audit of the
internal controls and oversight for the incentive payment award
process identified opportunities to strengthen controls, including the
need to maintain appropriate supporting documentation; provide
additional guidance to human capital staff to ensure proper, timely,
and accurate execution and recording of administrative actions; and
provide effective monitoring and oversight. In addition, we identified
an opportunity for GAO to help ensure that incentive payments support
agency recruitment and retention goals by establishing a clear agency-
wide strategy and results-oriented performance measures for these
payments.
We initiated this audit to determine the extent to which GAO's Human
Capital Office (HCO) had (1) established effective internal controls
and oversight mechanisms to ensure that its recruitment, relocation,
and retention incentives were consistent with GAO policy, and (2)
aligned its use of these incentives with the agency's human capital
strategic plan. To address our first objective, we analyzed and
reconciled GAO files, including personnel and payment files, and
interviewed knowledgeable officials, with the purpose of identifying
the universe of incentive payments awarded from January 1, 2009,
through December 31, 2011, by year and incentive type. Through our
analyses, we determined the data were sufficiently reliable for
purposes of this report. Using this universe of recruitment and
retention incentive payments (GAO made no relocation incentive
payments), we then performed a detailed file review of documentation
intended to support the payment requests, their approval, and
monitoring activities. We also assessed the effectiveness of GAO's
controls and oversight mechanisms in ensuring compliance with GAO
policy for these incentive payments. To address our second objective,
we reviewed GAO's human capital strategic planning documents[Footnote
2] considering best practices and guidance for strategic and human
capital planning developed by GAO and the Office of Personnel
Management (OPM) for federal agencies.[Footnote 3] We also interviewed
GAO staff and managers knowledgeable about recruitment, relocation,
and retention incentives and human capital management.
We conducted this performance audit from September 2011 through August
2012 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Background:
Through the Federal Workforce Flexibility Act of 2004, Congress
provided agencies with enhanced recruitment, relocation, and retention
bonus authorities to help improve the federal government's
competitiveness in recruiting and maintaining a high-quality
workforce. GAO has incorporated certain provisions of this law and
OPM's regulations[Footnote 4] into its policy for paying recruitment,
relocation, and retention incentives. GAO Order 2575.1 provides this
policy and the general framework of procedures, controls, and guidance
for using these incentives at GAO.[Footnote 5]
All GAO employees, with the exception of the Comptroller General, are
eligible for incentive payments subject to the provisions of the GAO
order. According to the order, a recruitment payment provides an
incentive for an individual to accept a GAO position that would
otherwise be difficult to fill. A recruitment incentive may be paid to
a new appointee to GAO or to a former GAO employee who has had a break
in service from GAO of at least 90 days. A relocation payment may be
paid to a current employee who must relocate to accept a position in a
different geographic area when the position otherwise would be
difficult to fill in the absence of an incentive. A retention payment
provides an incentive for a current employee to stay with GAO when the
employee's unusually high or unique qualifications make it essential
for GAO to retain the employee or when GAO has a special need for the
employee's services and the GAO unit believes there is a high risk
that the employee is likely to leave the agency in the absence of the
incentive. In addition to eligibility requirements, the GAO order
provides approval procedures and criteria, service agreement
requirements, policies for determining incentive amounts and
compensation limits, and payment options, as well as provisions for
terminating service agreements and for oversight and review of
retention incentive payments.
To request an incentive payment, the unit head of the requesting unit
submits a written recommendation to the authorizing official that
describes the difficulty experienced in recruiting qualified
candidates with the competencies required for the position in the
absence of an incentive. This recommendation is to be based on
consideration of a number of factors to determine that a position is
difficult to fill, including: (1) the availability and quality of
candidates possessing the competencies required for the position; (2)
the salaries typically paid outside the federal government for similar
positions; (3) recent turnover in similar positions; (4) employment
trends and labor-market factors that may affect the agency's ability
to recruit candidates for similar positions; (5) special or unique
competencies required for the position; (6) agency efforts to use
nonpay authorities, such as special training and work scheduling
flexibilities, to resolve difficulties alone or in combination with a
retention incentive; or (7) the desirability of the duties, work or
organizational environment, or geographic location of the position.
The unit head also provides a recommendation and justification for the
amount, payment option, and length of the required service period.
The Chief Human Capital Officer or designee is the authorizing
official responsible for reviewing and approving incentive
recommendations unless the incentive is recommended by the Chief Human
Capital Officer or the amount exceeds 25 percent of basic pay based on
critical agency needs.[Footnote 6] For such exceptions, the
authorizing official is the Chief Administrative Officer or the
Comptroller General if the incentive is recommended by the Chief
Administrative Officer. HCO is responsible for maintaining all
documentation sufficient to allow reconstruction of incentive-related
actions.
Incentive Payments for Calendar Years 2009 through 2011:
Our analysis showed that from January 1, 2009, through December 31,
2011, GAO paid more than $1.8 million in recruitment and retention
incentives, with approximately $1.4 million (about 75 percent) paid
for employee retention purposes. GAO paid these incentives to a total
of 155 employees--106 for recruitment, 49 for retention, and none for
relocation. Table 1 summarizes the number of employees and amounts
paid for each type of incentive by calendar year.
Table 1: Number of Employees and Dollar Amounts of GAO Incentive
Payments for Calendar Years 2009 through 2011:
Calendar year: 2009;
Recruitment incentives:
Number of employees: 57;
Amount paid: $252,893;
Relocation incentives:
Number of employees: 0;
Amount paid: $0;
Retention incentives:
Number of employees[A]: 43;
Amount paid: $472,309;
Total incentives:
Number of employees[A]: 100;
Amount paid: $725,202.
Calendar year: 2010;
Recruitment incentives:
Number of employees: 46;
Amount paid: $190,500;
Relocation incentives:
Number of employees: 0;
Amount paid: $0;
Retention incentives:
Number of employees[A]: 43;
Amount paid: $474,084;
Total incentives:
Number of employees[A]: 89;
Amount paid: $664,584.
Calendar year: 2011;
Recruitment incentives:
Number of employees: 3;
Amount paid: $30,000;
Relocation incentives:
Number of employees: 0;
Amount paid: $);
Retention incentives:
Number of employees[A]: 44;
Amount paid: $438,314;
Total incentives:
Number of employees[A]: 47;
Amount paid: $468,314.
Calendar year: Total;
Recruitment incentives:
Number of employees: 106;
Amount paid: $473,393;
Relocation incentives:
Number of employees: 0;
Amount paid: $0;
Retention incentives:
Number of employees[A]: 49;
Amount paid: $1,384,707;
Total incentives:
Number of employees[A]: 155;
Amount paid: $1,858,100.
Source: OIG analysis of GAO data.
[A] Employees may receive retention incentive payments over several
years. As a result, the columns showing the total number of employees
receiving these payments and the total number of employees who
received incentive payments over the three years do not total.
[End of table]
GAO used recruitment incentives to hire employees in 16 different
occupational series during the 3 years in our audit. Recruitment
incentives were paid most frequently for the auditing (55 employees
received recruitment incentives totaling $196,000) and computer
science (19 employees received payments totaling $73,393) occupational
series. Payments offered for the computer science occupation--the only
occupational series to receive recruitment incentives all 3 years--
were $4,000 each. Table 2 summarizes recruitment incentive data by
occupational series for the 3-year period covered in our audit.
Table 2: Total Employees Hired and Recruitment Incentives Paid by
Occupational Series for Calendar Years 2009 through 2011:
Occupational series: 101;
Title: Social science;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 12;
Percentage of employees hired who received a recruitment incentive: 8%;
Total recruitment incentives paid: $5,000.
Occupational series: 110;
Title: Economist;
2009 through 2011:
Employees paid a recruitment incentive: 6;
Total employees hired: 7;
Percentage of employees hired who received a recruitment incentive:
86%;
Total recruitment incentives paid: $35,000.
Occupational series: 201;
Title: Human resource management;
2009 through 2011:
Employees paid a recruitment incentive: 2;
Total employees hired: 14;
Percentage of employees hired who received a recruitment incentive:
14%;
Total recruitment incentives paid: $10,000.
Occupational series: 340;
Title: Program management;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 13;
Percentage of employees hired who received a recruitment incentive: 8%;
Total recruitment incentives paid: $5,000.
Occupational series: 343;
Title: Management and program analysis;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 10;
Percentage of employees hired who received a recruitment incentive:
10%;
Total recruitment incentives paid: $4,000.
Occupational series: 347;
Title: GAO analyst;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 426;
Percentage of employees hired who received a recruitment incentive: 0%;
Total recruitment incentives paid: $6,000.
Occupational series: 501;
Title: Financial administration and program;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 2;
Percentage of employees hired who received a recruitment incentive:
50%;
Total recruitment incentives paid: $7,500.
Occupational series: 511;
Title: Auditing;
2009 through 2011:
Employees paid a recruitment incentive: 55;
Total employees hired: 73;
Percentage of employees hired who received a recruitment incentive:
75%;
Total recruitment incentives paid: $196,000.
Occupational series: 801;
Title: General engineering;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 4;
Percentage of employees hired who received a recruitment incentive:
25%;
Total recruitment incentives paid: $5,000.
Occupational series: 904;
Title: Law clerk;
2009 through 2011:
Employees paid a recruitment incentive: 3;
Total employees hired: 7;
Percentage of employees hired who received a recruitment incentive:
43%;
Total recruitment incentives paid: $22,500.
Occupational series: 905;
Title: General attorney;
2009 through 2011:
Employees paid a recruitment incentive: 5;
Total employees hired: 12;
Percentage of employees hired who received a recruitment incentive:
42%;
Total recruitment incentives paid: $38,000.
Occupational series: 1301;
Title: General physical science;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 2;
Percentage of employees hired who received a recruitment incentive:
50%;
Total recruitment incentives paid: $5,000.
Occupational series: 1510;
Title: Actuarial science;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 1;
Percentage of employees hired who received a recruitment incentive:
100%;
Total recruitment incentives paid: $20,000.
Occupational series: 1530;
Title: Statistics;
2009 through 2011:
Employees paid a recruitment incentive: 1;
Total employees hired: 1;
Percentage of employees hired who received a recruitment incentive:
100%;
Total recruitment incentives paid: $4,000.
Occupational series: 1550;
Title: Computer science;
2009 through 2011:
Employees paid a recruitment incentive: 19;
Total employees hired: 19;
Percentage of employees hired who received a recruitment incentive:
100%;
Total recruitment incentives paid: $73,393.
Occupational series: 2210;
Title: Information technology;
2009 through 2011:
Employees paid a recruitment incentive: 7;
Total employees hired: 21;
Percentage of employees hired who received a recruitment incentive:
33%;
Total recruitment incentives paid: $37,000.
Total:
2009 through 2011:
Employees paid a recruitment incentive: 106;
Total employees hired: 624;
2009 through 2011: 17%;
Total recruitment incentives paid: $473,393.
Source: OIG analysis of GAO data.
[End of table]
GAO made retention incentive payments during the 3 years in our audit
to 49 employees within 13 occupational series but most frequently to
employees within the GAO analyst, social science, economist, and
auditing positions. Specifically, GAO paid a total of $301,175 to 11
GAO analysts, $210,467 to 7 social scientists, $226,614 to 6
economists, and $134,171 to 7 auditors. For those employees who
received a retention incentive within the 3-year period, the
percentage rate used by HCO in calendar year 2011 to calculate
retention incentives ranged from 1 percent to 25 percent of the
employee's basic salary, with an average rate of 8 percent. Table 3
summarizes retention incentive data by occupational series for the 3-
year period.
Table 3: Retention Incentives Paid by Occupational Series for Calendar
Years 2009 through 2011:
Occupational series:
Number: 1;
Title: Senior executive service;
2009 through 2011:
Employees paid a retention incentive: 3;
Average total employees in occupational series: 127;
Average percentage of employees paid a retention incentive: 2.37%;
Total retention incentive payments: $94,710.
Occupational series:
Number: 80;
Title: Security administration;
2009 through 2011:
Employees paid a retention incentive: 1;
Average total employees in occupational series: 17;
Average percentage of employees paid a retention incentive: 6.00%;
Total retention incentive payments: $22,435.
Occupational series:
Number: 101;
Title: Social science;
2009 through 2011:
Employees paid a retention incentive: 7;
Average total employees in occupational series: 48;
Average percentage of employees paid a retention incentive: 14.48%;
Total retention incentive payments: $210,467.
Occupational series:
Number: 110;
Title: Economist;
2009 through 2011:
Employees paid a retention incentive: 6;
Average total employees in occupational series: 56;
Average percentage of employees paid a retention incentive: 10.65%;
Total retention incentive payments: $226,614.
Occupational series:
Number: 301;
Title: Miscellaneous administration and program analysis;
2009 through 2011:
Employees paid a retention incentive: 1;
Average total employees in occupational series: 42;
Average percentage of employees paid a retention incentive: 2.38%;
Total retention incentive payments: $8,971.
Occupational series:
Number: 347;
Title: GAO analyst;
2009 through 2011:
Employees paid a retention incentive: 11;
Average total employees in occupational series: 1,800;
Average percentage of employees paid a retention incentive: 0.61%;
Total retention incentive payments: $301,175.
Occupational series:
Number: 511;
Title: Auditing;
2009 through 2011:
Employees paid a retention incentive: 7;
Average total employees in occupational series: 250;
Average percentage of employees paid a retention incentive: 2.80%;
Total retention incentive payments: $134,171.
Occupational series:
Number: 1001;
Title: General arts and information[A];
2009 through 2011:
Employees paid a retention incentive: 3;
Average total employees in occupational series: 96;
Average percentage of employees paid a retention incentive: 3.14%;
Total retention incentive payments: $51,291.
Occupational series:
Number: 1529;
Title: Mathematical statistics;
2009 through 2011:
Employees paid a retention incentive: 3;
Average total employees in occupational series: 7;
Average percentage of employees paid a retention incentive: 42.86%;
Total retention incentive payments: $87,066.
Occupational series:
Number: 1530;
Title: Statistics;
2009 through 2011:
Employees paid a retention incentive: 1;
Average total employees in occupational series: 5;
Average percentage of employees paid a retention incentive: 20.00%;
Total retention incentive payments: $72,655.
Occupational series:
Number: 1550;
Title: Computer science;
2009 through 2011:
Employees paid a retention incentive: 1;
Average total employees in occupational series: 113;
Average percentage of employees paid a retention incentive: 0.89%;
Total retention incentive payments: $3,199.
Occupational series:
Number: 1811;
Title: Criminal investigation;
2009 through 2011:
Employees paid a retention incentive: 2;
Average total employees in occupational series: 14;
Average percentage of employees paid a retention incentive: 14.63%;
Total retention incentive payments: $37,451.
Occupational series:
Number: 2210;
Title: Information technology;
2009 through 2011:
Employees paid a retention incentive: 3;
Average total employees in occupational series: 164;
Average percentage of employees paid a retention incentive: 1.83%;
Total retention incentive payments: $134,682.
Total:
2009 through 2011:
Employees paid a retention incentive: 49;
Average total employees in occupational series: 2,738;
Average percentage of employees paid a retention incentive: 1.79%;
Total retention incentive payments: $1,384,707.
Source: OIG analysis of GAO data.
Note: Total retention incentive payments do not add due to rounding.
[A] In 2011, GAO reclassified communications analysts and visual
communications analysts previously classified in other series into
occupational series 1001, General Arts and Information.
[End of table]
Improved Controls Needed to Help Ensure Consistency and Adherence to
Incentive Payment Policy:
Although GAO Order 2575.1 sets the agency's policy for awarding
incentives and contains some procedural guidance regarding
documentation and oversight, HCO generally did not have the detailed
procedures needed to guide its personnel and others in ensuring
compliance with requirements prescribed by the order. Specifically, we
found that (1) key documentation was not maintained to support
reconstruction of incentive actions or did not support adherence to
policy; (2) human capital staff needed additional guidance to
effectively implement, administer, and oversee use of these monetary
tools; and (3) improvements in monitoring and oversight activities
were needed to help ensure that the use of incentive payments complies
with policy requirements and effectively supports human capital plans,
goals, and objectives.
Documentation Not Maintained or Inadequate:
HCO is required to maintain sufficient documentation to allow a
reviewer to reconstruct key actions associated with awarding
recruitment and retention incentive payments, including the original
request memorandum, service agreements, and approval determinations.
Our work showed that documentation to support recruitment actions was
generally limited to service agreements. As a result, HCO could not
provide documentation to support 73 percent of the recruitment
incentives paid over the 3-year period in our audit. In contrast, HCO
retained more of the documentation needed to reconstruct key actions
regarding retention incentives, including 71 percent of the original
request memorandums. In addition, while GAO Order 2575.1 requires that
legal requirements, including eligibility and compensation
limitations,[Footnote 7] be met prior to approval of a recruitment or
retention incentive, HCO had no documentation to support compliance
with these requirements. However, we verified that none of the
employees who received a recruitment or retention incentive during the
3 years in our audit had total salary amounts that exceeded the
compensation limits.
Our audit identified the following instances of HCO's documentation
being inadequate to reconstruct the need for the incentive or to
justify the incentive amount or percentage rate used to calculate the
retention incentive amount.
Recruitment incentives. None of the 29 written recommendations we
examined provided adequate justification for the amount awarded. For
23 of the 29 recommendations, HCO relied on an August 2008 memorandum
to document recommendation and approval actions related to recruitment
of financial auditors in fiscal year 2009. The memorandum identified a
set dollar amount of $2,500 or $4,000 per employee, based on the
individual's level of education, but did not provide a basis for these
amounts. Further, the memorandum did not demonstrate consideration of
factors prescribed by the order for determining when a position is
difficult to fill, such as the availability and quality of candidates
possessing the required competencies and the success of recent efforts
to recruit candidates for similar positions. Moreover, while OPM
regulations[Footnote 8] permit the use of group incentives, HCO did
not incorporate this provision of the OPM regulations into the GAO
order. According to HCO officials, HCO will consider amending GAO
Order 2575.1 to provide an explicit reference to group recruitment
incentives. Of the remaining six recommendations that provided no
basis for the recruitment incentive amount, one also did not show that
consideration was given to any of the justification factors identified
in the order as a basis for recommending the recruitment incentive, as
required.
Retention incentives. While HCO retained more of the documentation
associated with retention actions than recruitment actions, we found
that the documentation did not always support efficient reconstruction
of the actions taken and that justifications provided for awarding a
retention incentive did not always fully address the requirements of
the order. Specifically, we found that HCO had retained the original
request memorandums for 35 (71 percent) of the 49 employees who
received a retention incentive within the 3-year period. However, for
8 of these 35, our analysis showed that HCO had approved retention
incentive rates that differed from those recommended by the requesting
manager and we could find no explanation of how the approved rate was
determined in the file documentation. For 3 of the 8, the approved
percentage rate used to calculate the retention incentive was higher
than the recommended rate.
In another case, we could not reconstruct HCO's basis for awarding an
employee a bi-weekly retention incentive rate of 6 percent of basic
salary with a $3,000 lump sum payment. HCO had not retained the
original request memorandum, but the file contained a prior approval
for 4 percent with no lump sum payment and no documentation to support
the basis for its final approval determination. In addition, we found
12 original request memorandums that did not contain a basis, such as
a job offer or labor-market factors, for justifying the percentage
rate recommended, as required.
We also found that while HCO had obtained written requests for most of
the retention incentives paid in 2011, HCO approved the continuation
of five retention incentives following its January 2011 review based
on oral agreements with the requesting manager. The only documentation
available to reconstruct HCO's review of these five incentives
consisted of handwritten notations on HCO memorandum requests for
management input regarding continuation, reduction, or termination of
retention incentives. While these notations documented approval, they
provided no basis for the decision or support that consideration was
given to any of the required factors for determining whether a
retention incentive was still needed or should be reduced or
terminated.
There are currently no time limits on the use of retention incentives,
and GAO's order does not require units to provide written
certifications to continue a retention incentive or to demonstrate the
cost effectiveness of their extended use; furthermore, the order does
not require that the use of such payments be linked either to a
succession plan that identifies existing staff to develop and fill
critical positions or to a recruitment strategy. To illustrate how
these incentives are being used at GAO, table 4 shows that 20 of the
49 employees who received retention incentive payments during the 3-
year period had received such payments for 5 years or more.
Table 4: Length of Retention Incentives and Number of Employees
Receiving Incentives from Calendar Years 2009 through 2011:
Length of time: Less than 3 years;
Number of employees: 11;
3-year total paid: $158,886.
Length of time: 3 years to less than 5 years;
Number of employees: 18;
3-year total paid: 544,887.
Length of time: 5 years to less than 8 years;
Number of employees: 10;
3-year total paid: 224,356.
Length of time: 8 years to less than 10 years;
Number of employees: 2;
3-year total paid: 76,290.
Length of time: 10 years or more;
Number of employees: 8;
3-year total paid: 380,288.
Length of time: Total;
Number of employees: 49;
3-year total paid: $1,384,707.
Source: OIG analysis of GAO data.
[End of table]
While retention incentives are important flexibilities for retaining
critical skills, these incentives are not intended to be a replacement
for sound succession management and planning. OPM has proposed
regulations that add succession planning to the list of factors an
agency may consider before approving a retention incentive in an
effort to improve administration and oversight and to provide greater
emphasis on the cost and benefits associated with awarding or
continuing retention incentives.[Footnote 9] Specifically, agencies
would be required to determine whether a retention incentive should be
provided to an employee or whether other employees identified in the
agency succession plan possess the competencies required for the
position and could perform at the same level with minimal training,
cost, and disruption of service. While GAO is not required to follow
OPM guidance, strengthening justifications for ongoing retention
incentive payments and including succession planning among its
justification factors may help ensure that the extended use of
retention incentive payments is cost effective and consistent with
agency goals.
Our audit identified several factors that may have contributed to
HCO's difficulty in providing the documentation needed to reconstruct
incentive actions. First, we found that HCO relied on employees
assigned to its various units to process recruitment incentive actions
in compliance with policy and had not identified an accountable
individual for overall administration and oversight of recruitment
actions. Second, HCO had not provided detailed procedures regarding
how recruitment incentive action documentation should be maintained to
its staff. Third, HCO had not enforced GAO's documentation retention
policy, which requires that important records and files be retained in
the agency's records management system (DM/ERMS).[Footnote 10] As a
result, documentation pertaining to recruitment incentives was
primarily limited to the service agreements maintained in individual
employee personnel files rather than in the records management system.
According to HCO staff, implementation of the HR Connect human
resource system within HCO should help document actions
taken,[Footnote 11] though most of the documentation to support the
basis for the recruitment and retention incentive actions, such as the
memorandums recommending the incentive, job offers, decision
determinations, and other supporting documentation, would still have
to be maintained in GAO's records management system.
During our audit, we also identified a tool used by other agencies
that could potentially help HCO ensure maintenance of key
documentation. Other agencies, such as the Food and Drug
Administration and the Internal Revenue Service, use a standard form
to document incentive request and approval actions. A standard form,
with links or references to supplemental documentation--such as a copy
of the job offer and support for the incentive amount or rate
requested, could aid records maintenance and facilitate documentation
of actions taken and by whom, including validation of eligibility
requirements prior to approval of an incentive.
Detailed Procedures Needed:
Standard operating procedures can provide detailed guidance and serve
as key controls that enable an organization to provide management with
reasonable assurance that the objective or intent of its policy is
achieved. However, HCO has not developed detailed procedures that
describe the actions or processes for its staff and others to use for
consistent implementation of the agency's recruitment and relocation
incentive policies. Further, although GAO had developed procedures for
retention incentives, we identified several areas where improvements
could be made to help ensure compliance with the order.
Recruitment incentives. As previously discussed, HCO retained only
limited documentation regarding its recruitment incentive activities.
In our opinion, the need for detailed procedures to guide HCO's
administration and oversight activities contributed not only to the
lack of available documentation to reconstruct the basis for HCO's
recruitment incentive actions, but also to the difficulties we
encountered in obtaining a complete and reliable listing of employees
who had received a recruitment incentive during the 3 years in our
audit. The lack of detailed procedures to timely identify individuals
who left GAO prior to completing their agreed service period may have
also contributed to HCO's failure to identify and properly execute
collection actions for one of the four employees who received a
recruitment incentive within the 3-year period in our audit, but left
GAO prior to completing the required service period. During our audit,
GAO's Chief Human Capital Officer designated a senior human capital
specialist to manage its recruitment incentive activities and began
implementation of a centralized electronic file within the records
management system to capture and retain documentation associated with
the recruitment incentive actions. GAO also initiated efforts to
develop detailed procedures for recruitment incentive payments.
Relocation incentives. HCO does not have detailed procedures for
relocation incentives because the agency has not utilized relocation
incentives for years and currently has no plans to use this incentive.
However, since relocation payments are included in the GAO order and
could be used in the future, we believe it would be prudent for HCO to
establish detailed procedures at this time rather than wait until
after a decision is made to use this incentive.
Retention incentives. Although HCO has detailed procedures for
retention incentives, we found that procedures outlined for approvals
were not consistent with those required by the order. Specifically,
the GAO order states that all retention incentive requests are to be
approved by the Chief Human Capital Officer or designee unless the
incentive is requested by the Chief Human Capital Officer or the
incentive rate request exceeds 25 percent of an employee's basic pay.
However, HCO's procedures for retention incentives state that
approvals related to Senior Executive Service (SES) employees are made
by the Chief Administrative Officer. In addition, based on our
examination of retention files and procedures, we identified several
areas where additional detail would be helpful in guiding HCO efforts
to ensure compliance with the order. Specifically, we found that HCO's
retention procedures did not specify:
* what documentation should be included in the "business case" or
"review materials" provided to the Chief Human Capital Officer during
the approval process. This documentation is important in that it
provides the basis for an incentive approval. Having a clear
description of what should be provided to the approving official
enforces consistency in applying the procedures and enforces
compliance with the order.
* the criteria for determining whether there is sufficient basis for
(1) the specific retention incentive amount or rate recommended or (2)
continuation of the retention incentive. Clear criteria would help HCO
ensure that retention incentives are reviewed and approved
consistently, are cost effective, and are aligned with GAO's workforce
goals and critical needs.
* how final approval of a retention incentive should be documented,
including decisions that result in rates that differ from those
requested or prior approvals, or result in an employee receiving both
biweekly incentive payments and a lump sum payment following
completion of a specified period of service.
* the process for identifying and taking appropriate actions regarding
employees for whom conditions warrant termination of their incentive
due to demotion, separation for cause, ratings lower than "meets
expectations," or disciplinary action.
* the process that should be followed to ensure that each retention
incentive is reviewed at least annually and that action to reduce or
terminate a retention incentive as a result of a review is taken
promptly.
* records maintenance requirements, including the location of key
documentation--such as complete lists of employees approved to receive
retention incentives each year, initial and subsequent justification
and approval documentation, and other documentation needed to
reconstruct actions associated with awarding a retention incentive.
HCO has initiated efforts to ensure consistency with the order and
strengthen the criteria and processes used to determine percentage
rates for incentives and provide a basis for decisions to continue,
reduce, or terminate a retention incentive.
Terminating conditions. Our work showed that HCO needs an integrated
process and procedures to identify actions that require an employee's
incentive to be terminated. According to GAO policy, incentives can be
terminated based on (1) management need (for reasons such as workforce
restructuring or the employee is assigned to a different position);
(2) employee actions, including a demotion or separation for cause, a
rating of less than "meets expectations" on any competency in the
latest performance rating, or a disciplinary action; (3) a change to a
higher position; (4) a promotion; or (5) an employee leaving a
position for which an incentive was approved. We identified one
employee receiving a retention incentive that HCO had taken
disciplinary action against in April 2011, but had not terminated the
incentive as required by the order because the HCO staff members
responsible for retention incentive actions were unaware that the
disciplinary action had occurred until we informed them in April 2012.
In response to our audit, HCO terminated the employee's retention
incentive in June 2012 and is in the process of developing a process
and procedures to identify and respond to terminating conditions.
Improvements Are Needed in Monitoring and Oversight Activities:
GAO's Standards for Internal Control in the Federal Government
[Footnote 12] requires that internal control be designed to assure
that ongoing monitoring occurs in the course of normal operations,
which includes periodic evaluations of controls to assess whether they
are operating effectively, regular management oversight activities
(for example, HCO's requirement for annual reviews of retention
incentives), and periodic reporting to management. According to GAO
Order 0201.3, Management Responsibility for Internal Control, the GAO
Controller directs the assessment of and reporting on the
effectiveness of GAO's internal control in accordance with the
principles of Office of Management and Budget's (OMB) Circular No. A-
123.[Footnote 13] Our audit showed that monitoring and oversight
activities could be improved to better ensure that required
documentation is maintained, administrative controls over incentive
actions and payments are operating effectively, annual reviews of
retention incentives are performed, and management has the information
it needs to effectively oversee this program and ensure that
incentives are used in a manner consistent with human capital plans,
goals, and objectives.
Periodic evaluations of control can be useful in assessing the
effectiveness of a program and compliance with applicable policies and
procedures. However, we found that HCO's recruitment and retention
incentive actions are not reviewed as part of the agency's annual
management assessment of the effectiveness of the agency's internal
controls (A-123 review). Moreover, while GAO performs periodic testing
of payroll transactions as part of its internal control review, it has
not looked at certain transaction types, such as incentive payment
actions due to the low dollar value of incentive payments in
comparison to GAO's overall payroll. During the course of our audit,
the manager responsible for the agency's A-123 review process stated
that recruitment and retention incentives may be included as one of
the areas for review in a future review cycle.
GAO Order 2575.1 requires at least an annual review of each retention
incentive that is paid in equal biweekly installments at the retention
incentive percentage rate to determine whether the incentive should be
retained, reduced, or terminated. However, HCO has not performed
annual reviews of each retention incentive as required. We found that
HCO conducted no annual reviews in calendar year 2009 or 2010.
Further, although HCO conducted an annual review of 36 retention
incentives in January 2011, HCO excluded three employees from its
review even though their retention incentive had not been reviewed in
the past year. According to HCO staff, one of the three employees was
excluded from the review in error. The remaining two employees were
excluded because (1) one was an SES employee even though GAO policy
and retention procedures do not explicitly exclude SES from annual
review and (2) the other had been approved in fiscal year 2010 even
though the approval had occurred almost 14 months prior to the January
2011 review.
During the summer of 2011, GAO evaluated the percentage rates used to
calculate retention incentives for 36 employees receiving retention
incentive payments to identify budgetary savings. The evaluation did
not include an assessment of unit justifications to determine whether
a retention incentive should be continued, reduced, or terminated
since HCO had reviewed most of the justifications supporting retention
incentive payments during its January 2011 review. As a result of its
summer evaluation, the percentage rates used to calculate retention
payments for 27 employees were reduced by either 1 or 2 points and the
rates for 9 employees remained unchanged because the current retention
incentive had been approved within the last 2 fiscal years or the
employee was an SES.
Although GAO evaluated retention incentive rates during the summer of
2011, more than 18 months have passed since HCO performed an annual
review of justifications to determine whether a retention incentive
should be continued, reduced, or terminated. According to HCO
officials, the next annual review of retention incentives is scheduled
to begin August 2012.
Periodic reporting to management is an important control tool that
provides managers with information needed to help perform their
program oversight responsibilities. HCO officials acknowledged that
periodic reporting to GAO executives and management was not performed
or required. The lack of visibility of HCO's incentive activities by
GAO management may have contributed to the difficulties we encountered
at the beginning of our audit in identifying the universe of employees
who had received a recruitment or retention incentive during the 3-
year period and the longevity of retention incentives. In response to
our audit, HCO officials stated that GAO intends to institute periodic
reporting to GAO executives and managers regarding the agency's use of
recruitment and retention incentives. Data to consider incorporating
in these reports include: employee name; occupational series; level of
the staff receiving the incentive; the start date pertaining to the
initial incentive; whether a promotion has occurred during the year;
whether a succession plan or recruitment strategy is identified, as
appropriate, to mitigate the need for the incentive payments in the
future; and the date of the last review.
Employee Incentives Should Be Fully Incorporated into Strategic Human
Capital Planning:
GAO has previously identified the need for federal agencies to ensure
that use of human capital flexibilities--such as recruitment,
relocation, and retention incentive payments--is part of an overall
human capital strategy that is clearly linked to the agency's program
goals.[Footnote 14] Although GAO recognizes the importance of
strategic human capital management and a results-oriented
organizational culture, we found that the agency's human capital
strategy does not provide a clear approach for the use of recruitment,
relocation, and retention incentive payments or an assessment of the
associated costs and benefits derived from their use. GAO's current
human capital strategic plan[Footnote 15] establishes an objective to
recruit, develop, deploy, and retain a diverse, high-quality
workforce, and references developing a recruitment strategy to support
near-and long-term staffing requirements and enhancing retention
strategies to ensure they are responsive to employees' values.
However, we found that the plan does not address how recruiting and
retention incentives will be used or the results expected from their
use. Further, the plan does not identify measures GAO will use to
evaluate actual results. Although the agency has a strategic workforce
planning process to continuously analyze and monitor, among other
things, the number and skill mix of its employees and to plan for
hiring, attrition, and promotions, at the time of our audit, the
process did not capture data on the use or cost of recruitment,
relocation, and retention incentives.
Moreover, while GAO has performance measures such as new hire and
retention rates, they do not provide a clear assessment of whether
incentive payments were effectively targeted or helped the agency
ensure that the benefits derived are commensurate with their costs and
are consistent with strategic human capital and workforce planning
goals and objectives. For example, GAO uses its new hire rate measure
to provide an indication of the extent to which GAO was able to hire
the number of employees it planned to hire within a fiscal year.
However, it does not provide information about whether GAO used
recruitment and retention incentives to attract or retain employees or
whether an incentive payment was effective in the short term (duration
of service agreement) or long term (beyond the time period specified
in their service agreement). Similarly, GAO's retention rate measure
provides an indication of the percentage of people who have not left
the agency in the past fiscal year, but it does not provide an
assessment of the effectiveness of retention incentive payments to
retain staff.
We recognize, as GAO previously reported,[Footnote 16] that measuring
the direct effect of recruitment, relocation, or retention incentive
payments on recruitment and retention trends may be difficult because
they are not likely to be the only factor in an employee's decision to
join or stay with GAO. While incentive payments may influence an
employee's decision, other factors, such as labor market conditions
and GAO's standing as one of the best places in government to work,
could also affect these decisions. In prior work regarding student
loan repayment programs (another type of employee incentive), GAO
described similar difficulties faced by federal managers in developing
useful, outcome-oriented performance measures and proposed that
agencies collaborate more to develop strategies to identify
performance indicators and measure contributions to specific
outcomes.[Footnote 17] GAO executive management acknowledged that the
agency's current performance measures do not provide an assessment of
the effectiveness of incentive payments in recruiting or retaining
staff and have initiated efforts to identify data that could be used
to develop appropriate performance measures.
Conclusions:
Recruitment, relocation, and retention incentive payments are
important flexibility tools that can help GAO hire, retain, and
strategically manage its workforce. Establishing appropriate internal
controls for these tools is essential to help ensure they are used
efficiently and effectively. GAO recognizes the importance of controls
for the incentives program and, in response to our work, has initiated
actions to strengthen its framework of plans, policies, procedures,
and oversight processes pertaining to the use of these important
incentives. However, to help further ensure their effectiveness, we
believe GAO should incorporate the use of these incentives, the
results the agency expects to achieve, and the measures that will be
used to assess their effectiveness as part of GAO's human capital
management strategic planning process.
Recommendations for Executive Action:
To help ensure consistency and adherence to GAO policy and applicable
statutes and regulations related to recruitment, relocation, and
retention incentives, and to better align the use of these incentives
with strategic human capital and workforce planning goals and
objectives, we recommend that the Comptroller General direct the Chief
Human Capital Officer to take the following seven actions:
1. Update GAO's recruitment, relocation, and retention incentive
policy contained in GAO Order 2575.1 to:
a. strengthen justification factors for the continuation of retention
incentive payments by requiring a timeline or strategy for
eliminating, as appropriate, the need for future payments, and:
b. include a requirement for periodically reporting to GAO management
and executives on the agency's use of these incentives.
2. Consider development and use of a standard form to aid in
documenting incentive-related actions and maintaining documentation
needed to support reconstruction of actions taken.
3. Develop and implement detailed procedures for ensuring compliance
with recruitment and relocation requirements provided in GAO Order
2575.1.
4. Revise retention procedures to address any inconsistencies with GAO
Order 2575.1 and to ensure the completeness of the detailed procedures
in support of compliance.
5. Establish an integrated process and procedures to identify and
terminate, in a timely manner, recruitment, relocation, or retention
incentives based on the occurrence of conditions for termination as
defined by GAO Order 2575.1.
6. Establish a process to ensure that each retention incentive is
reviewed at least annually to determine whether it should be retained,
reduced, or terminated, and if it is to be continued or reduced, to
verify that a succession plan or recruitment strategy is in place, as
appropriate, to eliminate the need for the incentive in the future.
7. Incorporate the use of recruitment, relocation, and retention
incentives into GAO's strategic human capital planning to specify a
plan for their use, the results GAO expects to achieve, and the
measures that will be used to assess their effectiveness.
In addition, to help management monitor and evaluate the effectiveness
of controls related to recruitment, relocation, and retention
incentives, we recommend that the Comptroller General direct the Chief
Administrative Officer to take the following action:
Include recruitment, relocation, and retention incentives, as
appropriate, in periodic internal management reviews of internal
controls (A-123 reviews) to help ensure that control activities--such
as documentation maintenance, and transaction execution and recording
controls--are functioning properly.
Agency Comments and Our Evaluation:
The Inspector General provided GAO with a draft of this report for
review and comment. GAO agreed with our recommendations. The agency
also provided technical comments that we incorporated, as appropriate.
Actions taken in response to our recommendations are expected to be
reported to my office within 60 days.
We are sending copies of this report to the other members of GAO's
Executive Committee (Chief Operating Officer, Chief Administrative
Officer/Chief Financial Officer, and General Counsel), GAO's Audit
Advisory Committee, and other key managers. The report is also
available at no charge on the GAO website at [hyperlink,
http://www.gao.gov/about/workforce/ig.html].
If you or your staff have any questions about this report, please
contact me at (202) 512-5748 or garciaf@gao.gov. Contact points for
GAO's Office of Congressional Relations and Public Affairs may be
found on the last page of this report. Key contributors to this report
were Evelyn Logue; Ann Borseth; Cathy Helm, Deputy Inspector General;
and Michael Volpe, Counsel.
[End of section]
Comments from the Government Accountability Office:
GAO:
Memorandum:
Date: August 17, 2012:
To: Inspector General — Frances Garcia:
From: [Signed by] Chief Administrative Officer — David M. Fisher:
Subject: Agency Comments on Recruitment, Relocation, and Retention
Incentives Report:
Thank you for the opportunity to review your draft report on
Recruitment, Relocation, and Retention Incentives offered to GAO
employees. Overall, we agree with the eight recommendations contained
in your report, and we concur that additional oversight and monitoring
is needed in this area.
At this time, we offer only the general comments below. As required,
and within 60 days of your published report, we will provide you with
a summary of actions taken to date or planned actions for each
recommendation.
General Comments:
* To enhance the controls of this program and enforce stricter
oversight, GAO plans to elevate the approval level for employee
recruitment and retention incentives to the Chief Administrative
Office by revising our policy found in GAO Order 2575.1.
* It is important to note that, in this tight budget environment, the
agency has been very cognizant of the dollars expended on employee
incentives. From 2009-2011 (the time period reviewed for this report),
there has been a significant decline in the total dollar amounts
provided each year for incentives — almost a 35% reduction over three
years.
In closing, we appreciate your work in this area and for identifying
actions to take to strengthen controls over employee incentives while
continuing to meet the goals and objectives of GAO and our mission,
including attracting and retaining a highly qualified workforce to
carry out critical assignments.
If you have any questions, please contact me on 512-5800.
cc:
Cher Whitaker, Deputy Chief Administrative Officer:
Bill Anderson, Controller:
Pam Frere, FMBO/PAO Director:
Cathy Helm, Deputy OIG:
Audry Britton, OIG Executive Assistant:
[End of section]
Reporting Fraud, Waste, and Abuse in GAO's Internal Operations:
To report fraud, waste, and abuse in GAO's internal operations, do one
of the following. (You may do so anonymously.)
* Call toll-free (866) 680-7963 to speak with a hotline specialist,
available 24 hours a day, 7 days a week.
* Online at: https://OIG.alertline.com.
Obtaining Copies of GAO/OIG Reports and Testimony:
To obtain copies of OIG reports and testimony, go to GAO's Web site:
[hyperlink, www.gao.gov/about/workforce/ig.html].
Congressional Relations:
Katherine Siggerud, Managing Director, siggerudk@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, DC 20548:
Public Affairs:
Chuck Young, Managing Director, youngcl@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, DC 20548:
[End of section]
Footnotes:
[1] Federal Workforce Flexibility Act of 2004, Pub. L. No. 108-411,
118 Stat. 2305 (Oct. 30, 2004); 5 U.S.C. §§ 5753 and 5754.
[2] GAO, Human Capital Interim Strategic Plan: Fiscal Years 2010 -
2012 "Linking Strategy to Results Through People," [hyperlink,
http://www.gao.gov/products/GAO-10-269SP] (Washington, D.C.: Sept. 28,
2009); Management Improvement Priorities Action Plan (Jan. 21, 2010);
and 2011 Recruitment Strategy as included in the Fiscal Year 2011
Recruitment Kick-off Briefing (Aug. 17, 2010, and Sept. 2, 2010).
[3] GAO reports and guidance included: Results-Oriented Government:
GPRA Has Established a Solid Foundation for Achieving Greater Results,
[hyperlink, http://www.gao.gov/products/GAO-04-38] (Washington, D.C.:
Mar.10, 2004); Executive Guide: Effectively Implementing the
Government Performance and Results Act, [hyperlink,
http://www.gao.gov/products/GAO/GGD-96-118] (Washington, D.C.: June
1996); and Human Capital: Key Principles for Effective Strategic
Workforce Planning, [hyperlink, http://www.gao.gov/products/GAO-04-39]
(Washington, D.C.: Dec. 11, 2003); and OPM, Key Components of a
Strategic Human Capital Plan (September 2005).
[4] Recruitment, Relocation, and Retention Incentives; Supervisory
Differentials; and Extended Assignment Incentives, 5 C.F.R. Part 575.
[5] GAO, Recruitment, Relocation, and Retention Incentives, GAO Order
2575.1 (June 30, 2006).
[6] According to GAO Order 2575.1, basic pay refers to an employee's
total annual rate of pay, including the geographic zone differential
but before deductions and exclusive of premium pay of any kind.
[7] GAO Order 2575.1 states that payment of a recruitment, relocation,
and retention incentive is subject to the aggregate limitation on pay
under 5 U.S.C. § 5307 and 5 C.F.R. § 530, subpart B, which limits
payment of bonuses, awards, or other cash payments under title 5 in
any given year when payments to an employee's basic pay would exceed
the rate payable that year for level I of the Executive Schedule,
which is currently $199,700.
[8] 5 C.F.R. § 575.105 (b).
[9] OPM, proposed regulation, Pay under the General Schedule and
Recruitment, Relocation, and Retention Incentives (76 Fed. Reg. 1096,
Jan. 7, 2011).
[10] GAO's Document Management/Electronic Records Management System
(DM/ERMS) is the agency's official records management system that is
intended to capture, preserve, provide ready access to, and protect
the integrity of important documents, records, and files related to
GAO's business activities, processes, and engagements.
[11] According to HCO staff, HR Connect--the Department of the
Treasury's primary human resource system--is intended to help
integrate and support its human capital functions and processes.
[12] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[13] OMB Circular A-123 Revised, Management's Responsibility for
Internal Control (Dec. 21, 2004).
[14] GAO, Human Capital: Effective Use of Flexibilities Can Assist
Agencies in Managing Their Workforces, [hyperlink,
http://www.gao.gov/products/GAO-03-2] (Washington, D.C.: Dec. 6,
2002). As an example, see Human Capital: Opportunities Exist for FDA
and OPM to Improve Oversight of Recruitment, Relocation, and Retention
Incentives, [hyperlink, http://www.gao.gov/products/GAO-10-226]
(Washington, D.C.: Jan. 22, 2010).
[15] [hyperlink, http://www.gao.gov/products/GAO-10-269SP].
[16] [hyperlink, http://www.gao.gov/products/GAO-10-226].
[17] See for example, GAO, Results-Oriented Government: GPRA Has
Established a Solid Foundation for Achieving Greater Results,
[hyperlink, http://www.gao.gov/products/GAO-04-38] (Washington, D.C.:
Mar. 10, 2004).
[End of document]